Correlation Between Surgical Science and Episurf Medical

Can any of the company-specific risk be diversified away by investing in both Surgical Science and Episurf Medical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Surgical Science and Episurf Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Surgical Science Sweden and Episurf Medical AB, you can compare the effects of market volatilities on Surgical Science and Episurf Medical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Surgical Science with a short position of Episurf Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surgical Science and Episurf Medical.

Diversification Opportunities for Surgical Science and Episurf Medical

-0.15

Correlation Coefficient

Surgical Science  Episurf Medical

Good diversification

The 3 months correlation between Surgical and Episurf is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Surgical Science Sweden and Episurf Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episurf Medical AB and Surgical Science is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Surgical Science Sweden are associated (or correlated) with Episurf Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episurf Medical AB has no effect on the direction of Surgical Science i.e., Surgical Science and Episurf Medical go up and down completely randomly.

Pair Corralation between Surgical Science and Episurf Medical

Assuming the 90 days trading horizon Surgical Science Sweden is expected to generate 0.42 times more return on investment than Episurf Medical. However, Surgical Science Sweden is 2.39 times less risky than Episurf Medical. It trades about 0.3 of its potential returns per unit of risk. Episurf Medical AB is currently generating about -0.17 per unit of risk. If you would invest  14,610  in Surgical Science Sweden on September 23, 2024 and sell it today you would earn a total of  1,540  from holding Surgical Science Sweden or generate 10.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Surgical Science Sweden  vs.  Episurf Medical AB

Surgical Science Sweden

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Episurf Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Episurf Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Surgical Science and Episurf Medical

The main advantage of trading using opposite Surgical Science and Episurf Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surgical Science position performs unexpectedly, Episurf Medical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Episurf Medical will offset losses from the drop in Episurf Medical's long position.

The idea behind Surgical Science Sweden and Episurf Medical AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.